Market slump must not derail industry’s progress on people, training

2015 IADC Chairman Ed Jacob: Industry can’t save its way to prosperity, must maintain focus on building talent, safety culture

By Linda Hsieh, Managing Editor

As the drilling industry heads into a global slowdown, it seems almost inevitable that companies will shift their attention to cost reduction and away from people and training. But take it from someone who’s been through these cycles a few times before: “You can’t save your way to prosperity,” 2015 IADC Chairman Ed Jacob said.

Instead, the industry should focus on increasing efficiency and improving performance by continuing to hire good people and build a strong culture of safety. “I don’t believe that you should focus on reducing costs when business goes down. I believe you have to focus on reducing costs every day,” Mr Jacob said. It’s not about weighing costs against taking more risks. “Being safe is not a cost issue – it’s a moral issue, and it happens to be good business. We have to ask ourselves, why do we do what we do? Where is the return for what we do?”

Mr Jacob recalls joining Helmerich & Payne (H&P) in 1983 – his first job with a drilling contractor – right as the market was crashing. It was a tough time to be in the business, but companies that got their priorities straight were able to not just survive but thrive.

From the early 1980s to the early ’90s, the drilling industry lost close to half of its workforce, he said. “We really have to challenge ourselves this time to continue to recruit good people and continue to provide career opportunities for them.”

He also cautions against cutting back on training as a gut reaction to a softening market. “When we do that, we’re going to have more accidents. This industry has come a very long way in building a culture of not putting people in harm’s way. It’s imperative that our people can go home at night in the same condition they left in the morning. We’ve come such a long way to build a culture around that. Let’s not lose our focus now.”

Independence Contract Drilling’s 200 Series Shale Driller rigs are all working in the Permian Basin, including Rig 202 (above) and Rig 203 (below). These 1,500-hp rigs have walking and bi-fuel capabilities and are suited for long-reach horizontal drilling.

A 40-year career and counting

Growing up near New Orleans in Slidell, La., Mr Jacob landed his first job in the oil and gas industry as a pickup truck driver with National Supply Co in 1974. “I remember the first time I drove up to a drilling rig to deliver supplies, I was in awe. I wanted to learn everything about the rig and its equipment.”

That initial passion for the rig came into full bloom when Mr Jacob went to work for H&P as the Manager of Marketing and Contracts, learning from industry pioneers like George Dotson and Ray Marsh. “Once I started learning more about the technology it took to drill a well, I really fell in love with drilling. I learned that in some places, Mother Nature lives pretty close by. If you disturb her, she’ll come see you. Ray would always tell me, ‘Ed, the well is talking to you all the time. It’s whether you’re smart enough to know what it’s telling you.’ I’ve carried that with me my whole career.”

Since starting out at National Supply, Mr Jacob’s career has spanned more than 40 years, taking him through a series of leadership roles at H&P (1983-1996), Bayard Drilling Technologies (1996-1999), Grey Wolf (1999-2009) and Keen Energy Services (2009-2012). In February 2013, he took up his current position as President and COO of Independence Contract Drilling (ICD).

Although ICD was a small driller at the time – three rigs in its fleet and a fourth under construction – Mr Jacob said he was drawn by the style of equipment they had, the business model they aspired to and, most importantly, the people. “They had a core of talented young people,” he said. “I really enjoy leaving what I’ve learned with the younger guys so they can carry it on, just like other people have invested in me throughout my career. It’s really important to me that I give back to this industry.”

Rig 203

Within less than two years, ICD has grown to a fleet of 11 rigs, including nine of the 200 Series Shale Driller, operating mostly in the Permian Basin. Contracts are also in place for three newbuilds coming out in early to mid-2015.

It’s a success story, to be sure. Yet Mr Jacob said he doesn’t consider this tripling of the company fleet as his biggest accomplishment at ICD. “Rather than equipment, I think it’s the people and the culture that you establish that really differentiate companies. I think my biggest accomplishment at Independence has been establishing culture and getting a team of really talented young people to commit to that culture. They really believe in what we’re doing, and the results speak for itself.”

In particular, this culture embodies Mr Jacob’s uncompromising stance on safety: “If anyone asks you to risk life, limb or property, don’t do it. Stop, call the office, and we’ll handle it from there. Every company will put its full support behind the employee who makes the decision to stop… As drilling contractors, we need to take responsibility for our actions. The culture of ‘hurry up, hurry up’ doesn’t have a place in this industry today.”

Goals for 2015 chairmanship

Independence Contract Drilling’s Rig 205, currently working in the Permian Basin, is among the company’s fleet of 11 onshore rigs. Three more are under construction, due out in early to mid-2015.

As 2015 Chairman of IADC, Mr Jacob said one of his goals is to help the association engage with young people in this industry, much the way he has done at ICD. “It was refreshing to see so many young people at the IADC Annual General Meeting in November. I really want to make this organization a place that welcomes young people to join and participate. This means we’ll need to look at how IADC communicates with its members, such as through social media, and provide more learning opportunities for the young professionals in our industry today. They are our future.”

The next generation also must do their part, he said, by understanding and pursuing what they’re passionate about, by being willing to listen and learn, and by proactively seeking opportunities to participate in industry groups like IADC. “You get out of something what you put into it,” Mr Jacob said.
Regulatory and governmental policy is another focal area for his chairmanship. IADC – not only staffers but also leaders of member companies – must do more to engage the public, regulators and politicians. “There is rampant misinformation out there about our industry. Frankly, we’ve done a poor job at selling our story and have allowed others to sell the story for us in a negative way.

“If fracking goes away, this industry will dry up. We need to provide the public and regulators with more information. We don’t have to do multimillion-dollar commercial campaigns. We can sell our story, at least the drilling piece of it, through personal visits, by talking to people, utilizing social media and making good use of IADC resources like Taf Powell, Executive VP – Policy, Government & Regulatory Affairs. We need to get out in front and tell people what we’re doing – not just at the Washington, DC, level but also at the state level where our members are active.”

In the same vein, Mr Jacob said he would like to help IADC do a better job of selling itself to the drilling industry. This is an effort already in progress through the IADC Onshore and Offshore Advisory Panels that were set up in 2013 and the International Onshore Advisory Panel that’s expected to launch during 2015.

“We’ve been getting a lot of change and energy at IADC the last couple of years. By listening to its members through the advisory panels, IADC will be better able to direct its energy to where the members want it to go. We’ll be able to focus on being a united organization that stands for drilling contractors.”

Click here to watch a video with Ed Jacob from May 2014 as IADC was launching the Onshore Advisory Panel.